State upgrades standards that will expire next year

By Brian Nearing

Published 10:32 pm, Thursday, July 31, 2014

A revamped $250 million state program to subsidize more electricity from alternative energy could help drive down prices to the state by making it less expensive for developers to borrow money, an environmental advocate said.

This week the governor said the program will offer $250 million to fund large-scale clean energy generation projects such as wind farms, fuel cells, biomass facilities, renewable biogas, and upgrading of small- to medium-size hydropower projects.

Up to now, the state, environmentalists and business leaders have been frustrated that by the end of 2012, the program had not reached even half its goal of providing the state with 30 percent of its energy from renewable sources by the end of 2015.

To address that, the revised RPS contained a subtle but important change, said David Gahl, director of strategic engagement for the Westchester County-based Pace Energy and Climate Center. State contracts for projects approved for RPS funding will now run 20 years, double the current 10-year term.

That, said Gahl, should make lenders more willing to lend — and at lower interest rates — to clean-energy developers backed by a longer commitment of state cash. "This is great news. Going to 20-year contracts gives developers a much longer time frame and easier access to financing," he said.

So far, the RPS program through the New York State Energy Research and Development Authority has subsidized about 65 alternative energy projects with a total of about 1,900 megawatts, which is roughly equivalent to four fossil fuel-fired power plants. The RPS is funded with about $210 million annually from a fee on electric bills.

Said John B. Rhodes, president and CEO of NYSERDA, "We expect this updated program design to attract greater private sector investment to help reduce strain on the electric grid and protect the environment." The authority does not earmark funds for any particular technology, but awards subsidies — called renewable energy credits — based on factors including jobs created, economic benefits to the region and state, and the confidential bid price offered by each developer.

Connor Bambrick, air and energy director at the Albany lobbying group Environmental Advocates of New York, agreed the longer state contracts ought to drive down prices that alternative energy developers bid to NYSERDA. That price has been rising in recent years.

When the RPS started in 2004, he said, the state was paying about $14 annually per megawatt (a megawatt can power about 1,000 average homes). By 2011, that price was in the mid-$20s; last year, it hit $35.

"By moving beyond the 10-year contract, it ought to be cheaper for the state to buy (alternative energy), cheaper for developers to build, be more attractive for financiers, and provide a broader array of projects to select from," said Bambrick.

Bambrick said the longer contracts bring New York more in line with other states like Massachusetts and Connecticut, which have longer, more flexible contract terms.